Friday, November 05, 2004

He doesn't seem like the type, but former KGB-man-turned-Russian-president Vladimir Putin put his signature on the Kyoto Protocol today allowing it to take effect for all signatories. Countries producing at least 55 percent of all greenhouse gases had to sign in order for the agreement to come into force. With Russia's participation that number has been reached. The treaty calls for a reduction in greenhouse emissions in an attempt to mitigate global warming. (The United States has refused to sign the protocol. It produces more greenhouse gasses that any other country.)

Now, why would the second largest producer of hydrocarbons in the world sign such a treaty? The answer is quite straightforward. Russia wants integration with Europe, and Europe wants action on global warming. This was the price Russia had to pay.

There are pluses and minuses for Russia. For now, its industrial sector has been so devastated by post-Soviet era closures that it emits far less carbon dioxide than it used to. And, since it pollutes so much less, it will receive carbon emission credits which it can sell to European businesses for cash. (Each country's allowed emissions are based on 1990 figures, a year when Russian industry was far more vigorous and polluting that it is today. Hence, Russia now has credits to sell.)

But, as the Russian economy recovers, it will have to adopt stricter pollution control technologies, something that will result in new costs.

Putin is gambling that the exercise will be a net plus resulting in the moderization of Russian industry and the cementing of ties with Europe.

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